U.S. government bond market exercise stalls after outage on electronic-trading platform

Market individuals mentioned buying and selling within the U.S. Treasury market floor to a near-halt Friday afternoon on account of an outage by Brokertec, a key electronic-trading platform.

One of the most important avenues for buying and selling U.S. government paper electronically between major sellers, Brokertec is run by NEX Group, which was acquired by the CME Group in 2018. Brokertec controls round 80% of the market share for such interdealer buying and selling, in keeping with Greenwich Associates.

A CME Group spokeswoman confirmed that Brokertec had skilled technical difficulties and that buying and selling had been briefly suspended. CME Group later mentioned BrokerTec reopened buying and selling at 3:35 p.m. Eastern Time. Traders reported the outage started round 2 p.m.

On Friday, the 10-year Treasury word yield

TMUBMUSD10Y, -1.83%

fell 3 basis points to 2.701%, whereas the 2-year word yield was off 1.eight foundation factors to 2.547%, in keeping with Dow Jones Market Data.

“Everyone stopped buying and selling. The market form of melted down when these programs went down,” mentioned Tom di Galoma, managing director of Treasurys buying and selling at Seaport Global Securities. “There’s an amazing lack of liquidity when one thing like this takes place.”

It was unclear what number of merchants had been initially affected, however some market individuals described the outage as a “large one,” which had impacted operations for a broad swath of the fixed-income market. However, one other dealer mentioned quantity was already skinny on Friday afternoon before the outage.

Market individuals mentioned interruptions to digital buying and selling had been comparatively unusual.

But di Galoma warned if the outage had taken place throughout a extra frenetic interval for the bond market, such because the aftermath of an employment report it could have had a extra worrisome impact on buying and selling.

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